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career as a professional FX trader for hedge funds, banks, etc

  • #1
  • First Post: Jan 14, 2014 2:38am Jan 14, 2014 2:38am
Hi all,

I have the following issue which I have raised before a couple of years back.

Basically, there are no jobs for successful FX retail traders, it seems you cannot pursue this line of activity if you would like to do this for a living as part of an institution.

I don't know how traders in banks got there and what their exact activities are but I invite you to prove me different.

this is the question: can you turn FX trading into a career starting from a retail FX trader.

I am telling you, I have written to prop trading firms, brokers and all and it seems that we are so exotic that we are only seen as a one man operation.

why work for a firm rather than trading alone:
1. career and recognition
2. part of community
3. healt benefits
4. professional development
5. access to potential higher capital if successful

whereas alone:
1. no other human interaction
2. hard to market your FX skills
3. little evolution opportunities
4. one needs significant capital to be able to make this for a living

so what do you say, I dare you prove me that you can get a job as an FX trader (or trader in general) starting from a retail trader.

regards,
  • #2
  • Jan 14, 2014 3:39am Jan 14, 2014 3:39am
if you are that good in trading , do it yourself....
  • #3
  • Edited 4:48am Jan 14, 2014 4:37am | Edited 4:48am
Well, if you want to get into a trading department in a bank, you should have a pretty good uni degree and apply to "Capital Markets". In Germany I only know from Deutsche Bank and Commerzbank (i am german so I only know about them) and they only recrute 12 months from when you finished uni. From people who work there I know that they recrute alot of traders from their own people (so who startet a 3 year bank education after school and didn't went to uni). The Hedgefunds oft headhunt their people from the banks trading deparment (at least thats what I have read). Regarding PropTradingFirms have a look at youtube and search "SMB Capital on Wall St. Warriors". Its about a girl who wants to get a job at SMB.

Now honestly, you don't need them. Just my opinion on the points you mentioned:

1. career and recognition: for what? If you know who you are and know about your own worth, you need nobody to tell you (Selfesteem)
2. part of community: they don't give a f*** about you! You won't make friends in those (or any other) high paid jobs as they only fight for themself and are only there for the sake of money.
3. health benefits: getting up at 5am every day and working 60h a week is no health benefit. Trading on your own and managing your time in a healthy way is.
4. professional development: all the knowledge is out there (book) there may be a mentor at a bank but you still will have to make it on your own. (Methodology, Moneymanagement, Mind)

5. no other human interaction: as I said above you are not there to make friends, therefor you should join a sport team or whatever you like and get to know people (if you can't do that you should that a look at yourself)
6. market fx skills: finding someone if you have a strong trackrecord shouldn't be difficult
7. little evolution opportunities: when you start analysing your trades and failures and learn about your own psychology then you are entering a live-long-learning process
8. living from trading: trading is a get rich slowly scheme. Give yourself 5 years, make a plan how to achieve your goal. If you trade beside your job, maybe find a trading system that works on 1h+ and don't do the 1min or 5min daytrading stuff.

Hopefully thats does not sound to harsh, but that is my opinion. If you REALLY want to be a trader, you have to put all your focus on it and don't give up. As it goes with everything you really want to be good at. Hope it is of some help.
  • #4
  • Jan 14, 2014 4:39am Jan 14, 2014 4:39am
You can start trading as a PAMM manager and show you can be a winner constantly for years, which should make it easier to get a job as FX trader. Or win many contests (trader of the month etc) and put these at your job applications.
  • #5
  • Jan 14, 2014 4:58am Jan 14, 2014 4:58am
Quoting BGrigore
Hi all, I have the following issue which I have raised before a couple of years back. Basically, there are no jobs for successful FX retail traders, it seems you cannot pursue this line of activity if you would like to do this for a living as part of an institution. I don't know how traders in banks got there and what their exact activities are but I invite you to prove me different. this is the question: can you turn FX trading into a career starting from a retail FX trader. I am telling you, I have written to prop trading firms, brokers and all...
BGrigore,

Why the hell would anyone want to work for someone else if they can avoid doing so?

The reasons you mentioned all stem from wanting to feed personal arrogance, or from feelings of insecurity that might be appeased if you were part of a "group". If you can make money apart from working for the evil banks and hedge funds, do so! And do so with independence and satisfaction that you are not counted amongst those low life forms.

Personally, my favorite reason for not wanting to go to work trading for some outfit is that I enjoy trading in my pajamas!

-tah
  • #6
  • Jan 14, 2014 5:23am Jan 14, 2014 5:23am
"Traders" in banks make most of their money from market making and commissions. By and large most will tell you its impossible to make it as an independent trader. With a risk book of $100-$150 they are expected to generate $40-80 bucks a year.

If they were talented they would have joined a hedge fund by now. Where they would prob have to trade a portfolio of fx, rates, comods, equities. They are "good" if they generate 7-12% a year.

A "good" retail trader is probably leveraged 50:1 if not more, and usually claims to generate 40-50%, if not hundreds of %.
They trade in and out of the market usually not hedged with binary risk positions.

...no wonder retailers sound crazy compared to the industry pros. A Marty Schwartz or Mark Cool are far and few between.
  • #7
  • Jan 14, 2014 5:33am Jan 14, 2014 5:33am
BGrigore,

The only benefit for trading for a large Bank or other trading floor is having access to pending orders at Interbank level. This is something retail traders have no access too and is the main reason why so many fail at trading. Just because your system or indicators say BUY or SELL does not mean you will be profitable long term. You cant see the bigger picture. Banks, hedge funds and other financial institutions can.

Many on FF know me and what I used to-do for a living.

Yes, having a flash car, penthouse apartment, money, women, lavish holidays and having many trading friends around the world is very nice when all goes well. But, trust me when you start making mistakes or losing your company/client money then you are excluded from meetings, not invited to parties, ignored in the office, people stop taking your phone calls etc.

Having access to large amounts of capital etc is all fine but it comes at a cost. Usually to your health.

You are far better trading for yourself.

If you are that set on trading for BANK A or BANK B then write to Barclays Capital Trading Floor in London. They used to have a trading simulator (not sure if they still do or use it anymore), which works against you. It will give you buy/sell/hold signals and its upto you to agree or disagree based on a wealth of other information which you can use or ignore. It monitors all your trades and ranks them. At the end it will give you a score out of 100. Do well on that and they will more than likely give you a junior position. And I mean junior!

Don't forget that the rules that these big trading floors now work by have changed allot since the 1980's and 1990's. They are not about to let you start trading with $10 Million of their money.

Also, be careful as some will make you sign a form meaning you are liable for a percentage of your losses. Nothing worse than being asked to repay $25,000 at the end of the month because you ignored advice and got screwed on NFP day. Many have automated systems which will close out certain trades following certain rules. But if these systems fail then its back to YOU to-do the monkey manual trading. And god help you if you forget.

But, if its your dream, then go for it. Just don't watch the films about trading and making millions. Some do, yes but many do not.

Scoobs.
  • #8
  • Jan 14, 2014 5:55am Jan 14, 2014 5:55am
BGrigore,

having worked for others (as a dealer and a broker) in various markets, I enjoy working for myself for all the reasons listed above. Getting enough capital (and skills) together to survive as a fulltime trader is the hardest part. But I have worked for myself longer than for others, perhaps what you wish for depends on your stage in life.

There are opportunities to prove yourself - as olympus999 wrote - if that helps.

And yep, nothing beats pajama trading.

Good luck

A.
  • #9
  • Jan 14, 2014 7:24am Jan 14, 2014 7:24am
thanks a lot for the feedback, do appreciate it!

it's nice to see the views and advice of others!

best regards,

will be persevering then
  • #10
  • Jan 14, 2014 8:40am Jan 14, 2014 8:40am
Quoting scooby-doo
BGrigore, The only benefit for trading for a large Bank or other trading floor is having access to pending orders at Interbank level. This is something retail traders have no access too and is the main reason why so many fail at trading. Just because your system or indicators say BUY or SELL does not mean you will be profitable long term. You cant see the bigger picture. Banks, hedge funds and other financial institutions can. Many on FF know me and what I used to-do for a living. Yes, having a flash car, penthouse apartment, money, women, lavish...
That's someone with the bitter cold and hard reality. The best trick is join the big guys when you are young, learn enough and get into perspective. Once you have mastered enough quant, exit and form your own team.
  • #11
  • Jan 15, 2014 12:33am Jan 15, 2014 12:33am
Retail forex is a crap shoot.
If a "hedge fund" offers you a job run for the hills; I guarantee you they will go tits up!!
  • #12
  • Jan 15, 2014 3:12am Jan 15, 2014 3:12am
Quoting Sonofsin5
Retail forex is a crap shoot. If a "hedge fund" offers you a job run for the hills; I guarantee you they will go tits up!!
Tell that to Bridgewater which is now the worlds most successful hedge fund who have been going since 1975 and worth around $75 Billion. They made $12 Billion profit for their clients last year.

If they offer you a job then I would suggest you take it asap.

Scoobs.
  • #13
  • Jan 15, 2014 3:39pm Jan 15, 2014 3:39pm
what do you think of prop-traders.com website and prop trading directory here:

http://www.prop-traders.com/585/prop...trading-firms/

trading is capital intensive and a 20% ROE per year is quite a good performance in my opinion.

Thus, EUR 50,000 would be an absolute minimum to have as starting equity to even consider trading full time.

and better EUR 100,000. but these amounts are hard to save and therefore isn't prop trading a good option (or a job as a trader where you would also be paid a % of profits generated).

regards,
  • #14
  • Jan 15, 2014 11:56pm Jan 15, 2014 11:56pm
Quoting BGrigore
thanks a lot for the feedback, do appreciate it! it's nice to see the views and advice of others! best regards, will be persevering then
Of course, theres the social side to the choice. If you're a good trader, you will get on with most bar a few backstabbers.
The road to pipland is arduous and fraught with challenge.
  • #15
  • Jan 16, 2014 5:02am Jan 16, 2014 5:02am
Quoting traderathome
{quote}Personally, my favorite reason for not wanting to go to work trading for some outfit is that I enjoy trading in my pajamas!
hehe, very good!
Tracking the Specialists.
  • #16
  • Jan 16, 2014 7:24am Jan 16, 2014 7:24am
Quoting BGrigore
what do you think of prop-traders.com website and prop trading directory here: http://www.prop-traders.com/585/prop...trading-firms/ trading is capital intensive and a 20% ROE per year is quite a good performance in my opinion. Thus, EUR 50,000 would be an absolute minimum to have as starting equity to even consider trading full time. and better EUR 100,000. but these amounts are hard to save and therefore isn't prop trading a good option (or a job as a trader where you would also be paid a % of profits generated)....

This is a limiting belief of yours and will create a barrier to your trading success. There is a huge difference between trading and investing. You need to understand the difference. By your statement of 20% per year it appears you are talking about the latter.

Before anyone comes in and tells me otherwise you need to check your premises. There really is no point in debating this and I have read these debates countless times on FF.

Real world example... Look, if you had a choice between running a business in the construction industry that requires $30,000 (USD) of capital to start up, no debt, and potentially could net profit $500,000 after 5 years vs a business in the retail industry that required $200,000 (USD) capital plus another $1,500,000 of debt (property, equipment, goods) and after 5 years you have $300,000 of equity, which would you choose. If you were only aware and familiar with the retail industry you might think the above retail scenario is looking good and maybe it is as an industry standard, but you can have your debt and I will take scenario 1 all day long.

Regarding prop trading... Proprietary trading absolutely has it's benefits. You have access to capital and trading as an institutional trader. Capital risk is typically taken by the proprietary trading firm (some require you to front some risk capital in the beginning). I am able to trade the firms funds in addition to my own funds in a separate account, but here is where the real kicker is. I get to trade in an institutional account with institutional regulations. Spreads are basically 0.5 to 1 pip across the board (some at 1.5) and even though I reside in the US my leverage is not limited like a retail trader.
  • #17
  • Jan 16, 2014 7:29am Jan 16, 2014 7:29am
Quoting TantumVerum
{quote}Spreads are basically 0.5 to 1 pip across the board (some at 1.5) and even though I reside in the US my leverage is not limited like a retail trader.
Interesting point about the leverage Tantum, I read that retail traders in the US are restricted to 50:1? Would be very interesting and curious to know the possible leverage for institutional traders in the states please if you could share? I am presuming that this is not restricted whatsover? Many thanks
Tracking the Specialists.
  • #18
  • Jan 16, 2014 8:57am Jan 16, 2014 8:57am
Quoting Connected
{quote} Interesting point about the leverage Tantum, I read that retail traders in the US are restricted to 50:1? Would be very interesting and curious to know the possible leverage for institutional traders in the states please if you could share? I am presuming that this is not restricted whatsover? Many thanks
I don't know all of the regulations that encompass institutional entities, but they are regulated nonetheless. US retail traders are restricted to 50:1 and as a prop trader I am able to leverage higher. I am allowed 100:1, but I do not know if that is the institutional limit or not. Leverage is nice, but as with all things it must be controlled.
  • #19
  • Jan 16, 2014 9:10am Jan 16, 2014 9:10am
Trend trading indeed can result in higher returns but with greater volatility.

check out the link here detailing the performance of some trend following systems: http://www.trendfollowing.com/performance/

check out the performance of Mulvaney capital here: http://www.iasg.com/groups/group/mul...arkets-program

there are returns even greater than 100% and years when the results were significantly negative.

some funds aim for massive returns, others for modeerate and some are considered quite performant even at a 8-10% return per annum.

after all each has a strategy by which is quided and acts in accordance with the accepted risk tollerance.

Long Term Capital Management was hailed as a super fund as it returned 40% per annum (2nd and 3rd year), quite impressive (what happened in the end is detailed in a documentary called The Trillion Dollar Bet, quite interesting).

but in the end, even if you generate 10-20-50%, can you access this locked world of hedge funds// traders?

as retail discretionary traders we are twice at a disadvantage as there are now preferred quant, systematic traders, etc.

are we thus left as one-man operation, with no access to this ilusory world of fund?

regards,
  • #20
  • Jan 16, 2014 9:49am Jan 16, 2014 9:49am
Quoting TantumVerum
{quote} I don't know all of the regulations that encompass institutional entities, but they are regulated nonetheless. US retail traders are restricted to 50:1 and as a prop trader I am able to leverage higher. I am allowed 100:1, but I do not know if that is the institutional limit or not. Leverage is nice, but as with all things it must be controlled.
Interesting coming from a prop trader thanks for sharing your knowledge, definitely agree regarding leverage control, a double-edged sword indeed.
Tracking the Specialists.
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